EXHIBIT 2.6
FIRST AMENDMENT
TO
MERGER AGREEMENT
THIS AMENDMENT is made as of the 10th day of May 2000, by and between
Janex International, Inc., a Colorado corporation ("Janex"), DaMert Company, a
California corporation ("DaMert"), DaMert Toys and Games, Inc., a California
corporation ("New DaMert Sub") (collectively the "Merging Companies") and those
shareholders of DaMert identified on the signature pages of this Amendment (the
"Shareholders").
R E C I T A L S:
A. The parties identified above, together with Xxxxxxx X. Xxxxx into a
Merger Agreement, Dated March 24, 2000 (the "Merger Agreement"). Capitalized
terms used in this Amendment shall have the same meanings given those terms in
the Merger Agreement.
B. The parties desire to amend the Merger Agreement on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and conditions
contained herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
T E R M S:
1. Section B of Exhibit 1.6 to the Merger Agreement is hereby
deleted in its entirety and replaced with the following:
Two Million Six Hundred Fifty Thousand (2,650,000) shares of
Janex common stock (150,000 of said shares are to be issued to
CorDev Corporation). Janex will use its best efforts to
register the shares issued to DaMert shareholders under the
Securities Act within 150 days after the Closing. If a
Registration Statement is not effective within 150 days after
the Closing, then for each 30 day period thereafter during
which the Registration Statement is not effective, Janex will
issue DaMert shareholders an additional 15,000 shares of Janex
common stock. DaMert shareholders will not sell during any 3
month period more than the greater of: (i) 5% of Janex's
outstanding common stock, and (ii) 200% of the average weekly
reported trading volume during the 4 weeks preceding the sale.
1
Notwithstanding the foregoing, if the publicly traded price of
the Janex common tock is not at least $2.00 per share on the
date of the Closing, and said stock does not reach said price
(adjusted as necessary to take into account transactions such
as stock splits) within twenty-four (24) months thereafter,
then Janex shall issue additional shares of Janex common stock
to the DaMert shareholders, as soon as is practicable after
the date which is twenty-four (24) months after the date of
Closing, and the number of shares to be so issued shall be
calculated as follows: divide (x) the difference between (i)
$5,300,000 and (ii) the highest publicly traded closing price
of Janex's common stock during the 24 month period from the
Closing through the date which is 24 months thereafter, times
the 2,650,000 shares of stock issued pursuant to this Section
(including the value of all splits and other rights relating
thereto), by (y) the publicly traded closing price on the date
which is 24 months after the date of the Closing.
Each party receiving Janex stock agrees, and will
confirm said agreement by executing one or more documents so
confirming, in form and with content acceptable to Janex,
that: (A) the stock will be a restricted security, issued
pursuant to one or more exemptions to the registration
requirements of the Securities Act; and (B) the party
receiving the stock will execute such documents as are
necessary and/or appropriate to insure compliance with
applicable federal and state laws. Janex obtaining
documentation as to the foregoing shall be a condition to
the obligation of Janex to close the Merger.
Exhibits 1.6A, 1.6B and 1.6C are hereby deleted from
the Merger Agreement in their entirety.
2. Section B of Exhibit 6.14 to the Merger Agreement is hereby
deleted in its entirety and replaced with the following:
DaMert has entered into an agreement with CorDev Corporation
(Xxx Xxxxxx) relating to the sale of DaMert. The amount paid
to CorDev will be paid in shares of Janex common stock, which
will be paid out of the consideration due DaMert.
3. The $5.50 per share figure in Section 1.6 of the Merger
Agreement is hereby changed to $2.00 per share.
2
4. Section B of Exhibit 2.10 to the Merger Agreement is hereby
deleted in its entirety and replaced with the following:
1. Janex shall by the time of the Closing do the
following:
(i) Obtain releases of Xxxx XxXxxx and Xxxx Xxxxxx
DaMert of their personal guaranties of all
obligations under that certain real property lease,
dated July 27, 1995 for the premises located at 0000
Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx.
(ii) Either: (A) Payoff the debt obligations of
DaMert Company to AMRESCO Financial I, L.P.,
consisting of a credit facility of $2,500,000.00and
an additional loan of $300,000.00 or (B) assume said
debt obligations and provide Xxxx XxXxxx and Xxxx
Xxxxxx DaMert with fully executed releases signed by
appropriate representative from AMRESCO of Xxxx
XxXxxx'x and Xxxx Xxxxxx DaMert's personal guaranties
of said obligations.
(iii) Repay to Xxxx XxXxxx the debts owing to him by
DaMert in the aggregate principal amount of $128,849,
together with all interest and other charges due
thereon, by Buyer issuing Xxxx XxXxxx 64,425 shares
of Buyer's common stock. Xxxx XxXxxx agrees that said
stock shall constitute full repayment of said debt.
Xxxx XxXxxx will not sell during any 3 month period
more than the greater of: (i) 5% of Janex's
outstanding common stock, and (ii) 200% of the
average weekly reported trading volume during the 4
weeks preceding the sale.
Notwithstanding the foregoing, if the publicly traded
price of the Janex common stock is not at least $2.00
per share on the date of the Closing, and said stock
does not reach said price (adjusted as necessary to
take into account transactions such as stock splits)
within twenty-four (24) months thereafter, then Janex
shall issue additional shares of Janex common stock
to the Xxxx XxXxxx, as soon as is practicable after
the date which is twenty-four (24) months after the
date of Closing, and the number of shares to be so
issued shall be calculated as follows: divide (x) the
difference between (i) $128,849 and (ii) the highest
publicly traded closing price of Janex's common stock
during the 24 month period from the Closing through
the date which is 24 months thereafter, times the
64,425 shares of stock issued pursuant to this
Section (including the value of all splits and other
rights relating thereto), by (y) the publicly traded
closing price on the date which is 24 months after
the date of the Closing.
3
2. Janex upon execution of this Agreement shall and hereby
does without limitation, indemnify, defend and hold DaMert and/or its
Shareholders and guarantors harmless from any and all obligations,
liabilities, losses, costs and expenses, including reasonable
attorneys' fees incurred by any of them in connection therewith,
of DaMert, its Shareholders and guarantors owing to ARMESCO
Financial I, L.P., and its successors and assigns, and from all
obligations under that certain real property lease, dated July 27,
1995 for the premises located at 0000 Xxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxx.
5. Xxxxx Xxxx is no longer an employee of DaMert. All references to
Xxxxx Xxxx in the Merger Agreement (including its Exhibits) are hereby deleted,
and neither Janex or NewDaMertSub shall have any obligations as a result of the
Merger Agreement owing to Xxxxx Xxxx.
6. Section 1.9 of the Merger Agreement is hereby deleted in its
entirety, Section 1.10 of the Merger Agreement is hereby deleted in its
entirety, the words "(including all information required to be included in the
Proxy Statements and the Registration Statement)" appearing in Section 1.12 of
the Merger Agreement are hereby deleted in their entirety, and any and all other
references to Form S-4 and/or proxy materials are hereby deleted from the Merger
Agreement (including its Exhibits).
7. The Closing Date appearing in Section 1.2 of the Merger
Agreement is hereby changed from March 20, 2000, to July 31, 2000.
8. Section B Exhibit 2.8.1, paragraph 1., item [6] is amended to read
$130,000 and paragraph 2., item [6] is amended to read $125,000.
9. Xxxxxxx X. Xxxxx is no longer a party to the Merger Agreement. He
shall not be a "Shareholder" for purposes of the Merger Agreement, including as
to any representations or warranties, or any other provisions of the Merger
Agreement. He is released from any and all obligations under the Merger
Agreement.
10. New DaMert Sub will be a Delaware corporation, not a California
corporation.
11. Except as expressly called for in this Amendment, the Merger
Agreement continues unmodified and in full force and effect.
12. This Amendment may be executed by the parties in one or more
counterparts, and any number of counterparts signed in the aggregate by the
parties shall constitute a single instrument. The parties authorize and agree to
accept facsimile signatures in counterparts to this Agreement, and that said
facsimile signatures shall for all purposes be binding upon the parties as if
the same were originals
4
DATED the date first written above.
JANEX: Janex International, Inc., a Colorado corporation
By /s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx, President
DaMERT: DaMert Company, a California corporation
By /s/ Xxxxxxxxx X. XxXxxx
----------------------------------------------
Xxxxxxxxx X. XxXxxx, Chairman
SHAREHOLDERS:
DaMert: /s/ Xxxxxxxxx X. XxXxxx
----------------------------------------------
Xxxxxxxxx X. XxXxxx, Trustee of the DaMert
Trust, UTD September 28, 1998
/s/ Xxxx Xxxxxx DaMert
----------------------------------------------
Xxxx Xxxxxx DaMert, Trustee of the DaMert
Trust, UTD September 28, 1998
Janex: /s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx
The undersigned was originally a party to the Merger Agreement, and
hereby consents to this Amendment, as of the date first hereinabove written.
Since the undersigned is no longer part of the transaction, any further
amendments shall not require the signature of the undersigned.
XXXXX:
/s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx
5
JANEX INTERNATIONAL, INC.
MERGER AGREEMENT
MARCH, 2000
DAMERT COMPANY
1
TABLE OF CONTENTS
SECTION
ARTICLE I
THE MERGER
The Merger .......................................................... 1.1
Effective Time ...................................................... 1.2
Effect of the Merger ................................................ 1.3
Certificate of Incorporation; Bylaws ................................ 1.4
Directors and Officers .............................................. 1.5
Consideration for the Merger, Conversion of Securities .............. 1.6
Shares of Dissenting Holders ........................................ 1.7
Exchange of Securities and Payment of Merger Consideration .......... 1.8
Exchange Agent ................................................. 1.8.1
Exchange Procedures ............................................ 1.8.2
No Further Ownership Rights in Stock of Merging Companies....... 1.8.3
Termination of Exchange Fund ................................... 1.8.4
Delivery to a Public Official .................................. 1.8.5
Proxy Statements; Registration Statement ............................ 1.9
Meetings of Stockholders ............................................ 1.10
Vote Required ....................................................... 1.11
Appropriate Action; Consents; Filings ............................... 1.12
Shareholders' Agreement to Vote ..................................... 1.13
ARTICLE II
ADDITIONAL AGREEMENTS
Notification of Certain Matters ..................................... 2.1
Public Announcements ................................................ 2.2
Access to Customer Files and Other Records .......................... 2.3
Due Diligence Investigation ......................................... 2.4
Confidentiality ..................................................... 2.5
Interim Events ...................................................... 2.6
401(k) Plan ......................................................... 2.7
Employment Agreements ............................................... 2.8
Indemnification ..................................................... 2.9
Indemnification of DaMert Obligations ............................... 2.10
Expenses and Costs of Merger ........................................ 2.11
Restrictive Covenants ............................................... 2.12
Other Agreements .................................................... 2.13
Other Discussions ................................................... 2.14
Best Efforts to Register Stock ...................................... 2.15
i
ARTICLE III
REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
OF
EACH MERGING COMPANY
AND
ITS SHAREHOLDERS
Due Incorporation ................................................... 3.1
Capitalization ...................................................... 3.2
Subsidiaries ........................................................ 3.3
Financial Information ............................................... 3.4
Taxes ............................................................... 3.5
Material Changes .................................................... 3.6
Title to Assets; Liens .............................................. 3.7
Litigation .......................................................... 3.8
Compliance with Laws ................................................ 3.9
Insurance ........................................................... 3.10
Licenses ............................................................ 3.11
Hazardous Materials ................................................. 3.12
Judgments Against the Merging Company and/or Business................ 3.13
Complete Sale ....................................................... 3.14
Assets in Good Condition ............................................ 3.15
Disclosure Materials ................................................ 3.16
Defaults ............................................................ 3.17
Material Contracts .................................................. 3.18
Outstanding Liabilities ............................................. 3.19
Inventory ........................................................... 3.20
Receivables ......................................................... 3.21
Employees ........................................................... 3.22
No Conflicts ........................................................ 3.23
Violations of Law ................................................... 3.24
Condition and Sufficiency of Assets ................................. 3.25
Bank Accounts ....................................................... 3.26
Environmental Matters ............................................... 3.27
Intellectual Property ............................................... 3.28
Customers and Suppliers ............................................. 3.29
Changes to the Merging Companys' Documents .......................... 3.30
Stockholders Agreements and Other Agreements ........................ 3.31
Certain Payments .................................................... 3.32
Filings Complete .................................................... 3.33
Products ............................................................ 3.34
Patents ............................................................. 3.35
Indemnification; Survival ........................................... 3.36
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ARTICLE IV
CONDITIONS OF MERGER
Conditions to Obligation of Each Party to Effect the Merger ......... 4.1
Stockholder Approval ........................................... 4.1.1
No Order ....................................................... 4.1.2
No Challenge ................................................... 4.1.3
Representations; Warranties and Covenants ...................... 4.1.4
Consents Obtained .............................................. 4.1.5
No Material Adverse Change ..................................... 4.1.6
Opinions of Counsel ............................................ 4.1.7
Assignments .................................................... 4.1.8
Maintenance of Assets .......................................... 4.1.9
Ordinary Course of Business .................................... 4.1.10
Special Conditions .................................................. 4.2
ARTICLE V
TERMINATION, AMENDMENT AND WAIVER
Termination ......................................................... 5.1
Effect of Termination................................................ 5.2
Amendment ........................................................... 5.3
Waiver .............................................................. 5.4
ARTICLE VI
GENERAL PROVISIONS
Tax Treatment ....................................................... 6.1
Further Assurances .................................................. 6.2
Severability ........................................................ 6.3
Entire Agreement .................................................... 6.4
Assignment .......................................................... 6.5
Parties in Interest ................................................. 6.6
Successors and Assigns............................................... 6.7
Governing Law ....................................................... 6.8
Modification ........................................................ 6.9
Attorney's Fees ..................................................... 6.10
Counterparts ........................................................ 6.11
Notices ............................................................. 6.12
Paragraph Titles and Headings ....................................... 6.13
Brokerage, Finder's or Financial Advisor's Commissions .............. 6.14
Miscellaneous ....................................................... 6.15
iii
LIST OF EXHIBITS
List of Directors and Officers of Janex ............................. 1.5
Merger Consideration and Conversion of Stock Options ................ 1.6
Form of Promissory Notes Constituting Merger Consideration ..... 1.6-A
Pledge Agreement ............................................... 1.6-B
Security Agreement ............................................. 1.6-C
Votes Required for Merger Approval .................................. 1.11
Terms of Employment Agreements ...................................... 2.8.1
Form for Employment Agreements
(including Exhibits "A" and "B" thereto) ........................ 2.8.2
Employment Agreement and Bonus Agreement for Xxxx ................... 2.8.3
Form of Employment Agreement for DaMert Managers .................... 2.8.4
Provisions Regarding Shareholder Loans and Guarantees ............... 2.10
Other Agreements .................................................... 2.13
Disclosure Schedules
Disclosure Schedule of Janex International, Inc. ............... 3-A
Janex Disclosure Regarding Stock Options, Warrants, etc .... 3A-3.2
Janex Disclosure Regarding Outstanding Liabilities ......... 3A-3.19
Janex Disclosure Regarding Employees ....................... 3A-3.22
Disclosure Schedule of DaMert Company .......................... 3-B
DaMert Disclosure Regarding Employees ...................... 3B-3.22
DaMert Disclosure Regarding Bank Accounts .................. 3B-3.26
DaMert Disclosure Regarding Patents ........................ 3B-3.28
DaMert Disclosure Regarding Customers and Suppliers ........ 3B-3.29
Allowed Excess Liabilities .......................................... 3.36
Form of Legal Opinion ............................................... 4.1.7
Special Conditions .................................................. 4.2
Surviving Provisions of Letter of Intent ............................ 6.4
Mailing List for Notices ............................................ 6.12
Brokerage Fees Payable .............................................. 6.14
iv
MERGER AGREEMENT
THIS MERGER AGREEMENT (the "Agreement") is entered into as of the ___
day of March, 2000, by and among Janex International, Inc., a Colorado
corporation ("JANEX"), DaMert Company, a California corporation ("DAMERT"),
DaMert Toys and Games, Inc., a California corporation ("New DaMert Sub")
(collectively, the "MERGING COMPANIES"), and those shareholders of Janex and
DaMert identified on the signature pages of this Agreement (the "Shareholders").
Upon the terms and subject to the conditions of this Agreement, DaMert
will merge with and into New DaMert Sub, with New DaMert Sub being the surviving
corporation and a wholly owned subsidiary of Janex. The parties intend that said
Merger (the "MERGER") will qualify as reorganizations under Section 368 of the
Internal Revenue Code of 1986 as amended (the "CODE").
By executing this Agreement, each of the Merging Companies and their
respective Shareholders represent and warrant to the other Merging Companies and
Shareholders that:
(i) the board of directors of the Merging Company has
determined that the Merger is fair to the Merging Company and
its stockholders, including any stockholders that are not
parties to this Agreement, and
(ii) the board of directors of the Merging Company has
approved and adopted this Agreement and the transactions
contemplated by it, and recommends approval and adoption of
this Agreement by its stockholders.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements in this Agreement, and intending to be legally bound by
this Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with applicable law, at the Effective Time
DaMert will merge with and into New DaMert Sub. As a result of the Merger, the
separate corporate existence of DaMert will cease and New DaMert Sub will
continue as the surviving corporation of this Merger.
1.2 EFFECTIVE TIME. As promptly as practicable after the satisfaction
or, if permissible, waiver of the conditions set forth in Article IV below, the
Merging Companies and Shareholders will cause the Merger to be consummated by
filing articles of merger or other appropriate documents with the applicable
government offices or agencies in such form as required by, and
1
executed in accordance with the relevant provisions of, applicable law (11:59
p.m. on the date of effectiveness of the last such filing being the "EFFECTIVE
TIME"). Immediately prior to the filings, the closing of the Merger (the
"CLOSING") will be held at the offices of Janex, at 0000 Xxxxx 00xx Xxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx 00000-0000, or elsewhere in the Phoenix Metropolitan
area at a location selected by Janex. If Janex is not ready, willing and able to
close the Merger by March 20, 2000, then DaMert and/or the Shareholders of
DaMert, thereafter at their sole discretion, may terminate this Agreement by
notifying Janex in writing of said election to terminate this Agreement. Unless
and until DaMert and/or the Shareholders of DaMert elect to terminate this
Agreement, the Agreement shall remain in full force and effect.
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger will be as provided in the provisions of applicable law. Without limiting
the generality of the foregoing, and subject to it, at the Effective Time,
except as otherwise provided in this Agreement, all the property rights,
privileges, powers and franchises of DaMert will vest in New DaMert Sub, and all
debts, liabilities and duties of DaMert will become the debts, liabilities and
duties of New DaMert Sub. Further, at the Effective Time, Janex and New DaMert
Sub shall and do hereby without limitation, indemnify, defend, and hold harmless
DaMert and/or its Shareholders and guarantors from any and all existing
obligations of DaMert, to and only to the extent the same have been disclosed to
Janex in this Agreement, or in the DaMert financial statements previously
delivered to Janex, or otherwise in writing.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS. At and after the Effective
Time, the Articles of Incorporation and the Bylaws of New DaMert Sub, as in
effect immediately prior to the Effective Time, will continue to be the Articles
of Incorporation and the Bylaws of the corporation surviving the Merger. The
parties acknowledge and agree that the Articles of Incorporation, Bylaws and
other corporate documents of Janex may at the election of Janex be revised to
change the name of Janex to "oKID, Inc.," whether as part of the Merger or
otherwise.
1.5 DIRECTORS AND OFFICERS. At the Effective Time, the directors and
officers of Janex and New DaMert Sub will be the persons listed on EXHIBIT 1.5,
each to hold office in accordance with the charter documents of Janex and New
DaMert Sub, until their successors are duly elected or appointed and qualified.
1.6 CONSIDERATION FOR THE MERGER, CONVERSION OF SECURITIES. At the
Effective Time, by virtue of the Merger and without any action on the part of
the Merging Companies, the Shareholders or the holders of any of the following
securities, except as provided in Section 1.7 below, each of the issued and
outstanding shares of capital stock of each of the Merging Companies (other than
shares of DaMert, if any, owned by Janex, which shares will be canceled, retired
and will cease to exist without the delivery of any consideration) will be
converted into the right to receive that amount of cash, promissory notes of
Janex, or shares of common stock of Janex specified in or determined in
accordance with EXHIBIT 1.6 (collectively, the "MERGER CONSIDERATION"). Any and
all options to acquire capital stock of DaMert issued and outstanding at the
Effective Time will be converted into options to acquire common stock of Janex
to and only to the extent and as specified in or determined in accordance with
EXHIBIT 1.6.
2
As of the Effective Time, and except as otherwise provided in Section
1.7 below, the outstanding securities of DaMert will no longer be outstanding
and will automatically be canceled and retired and will cease to exist, and each
holder of a certificate representing any shares of DaMert will cease to have any
rights with respect to those shares, except the right to receive the
consideration, without interest, issuable for those shares upon the surrender of
such certificate in accordance with Section 1.8.
The Merging Companies and the Shareholders have agreed upon values of
the stock of Janex for purposes of determining the number of shares to be issued
under this Agreement as consideration for the Merger, and also as consideration
under the Employment Agreements, if any, described in this Agreement. No
representation or warranty has been made by Janex, or any other person or
entity, as to the value of the Janex stock to be issued pursuant to this
Agreement, and the parties to acquire said stock take full risk and
responsibility as to said value, other than as expressly provided for in this
Agreement.
Wherever Janex stock is to be issued, Janex may, in its discretion,
issue fractional shares, or may pay cash in lieu of issuing fractional shares
based upon a value of $5.50 per share, or may issue only whole shares by
rounding what would be fractional shares up to the nearest whole share. Also,
Janex may in its discretion pay cash in lieu of all or a portion of any amounts
due under any Promissory Notes described on EXHIBIT 1.6.
All Janex stock issued pursuant to this Agreement, including any stock
issued pursuant to Employment Agreements referred to herein, if any, shall be
registered with the Securities Exchange Commission, subject to all restrictions
required by law, if any, to be placed on said stock and subject to all
restrictions placed upon said stock by the underwriter(s) of the stock. All such
stock shall be eligible to participate, on the same terms and in the same
proportions as granted to other shareholders of Janex, in any "piggy-back" or
other registration rights which may be made available, between the Closing and
one year thereafter, to any shareholder of Janex.
1.7 SHARES OF DISSENTING HOLDERS. This Section was intentionally
omitted.
1.8 EXCHANGE OF SECURITIES AND PAYMENT OF MERGER CONSIDERATION.
1.8.1 EXCHANGE AGENT. As soon as necessary and practicable to
permit the Exchange Agent to perform its obligations under this Agreement, but
in no event later than the Closing Date, Janex shall deposit with American
Securities Transfer & Trust, Inc. or such other bank or trust company selected
by Janex (the "EXCHANGE AGENT"), for the benefit of the Shareholders of the
Merging Companies, for exchange in accordance with this Agreement, cash,
promissory notes and common stock of Janex, in amounts equal to the Merger
Consideration due at the Closing, calculated in accordance with EXHIBIT 1.6.
3
1.8.2 EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Closing Date, the Exchange Agent will mail to each holder of record on
the Effective Date of a certificate or certificates which immediately prior to
the Closing Date represented outstanding shares of DaMert (the "OLD
CERTIFICATES") which were converted into the right to receive a share of the
Merger Consideration pursuant to Section 1.6 above:
(i) a letter of transmittal to be executed by the
holder (which will specify that delivery of the Old
Certificates will be effected, and risk of loss and title to
the Old Certificates will pass, only upon delivery of the Old
Certificates to the Exchange Agent, and which will be in such
form and have such other provisions as Janex may reasonably
specify); and
(ii) instructions for surrender of the Old
Certificates in exchange for the applicable share of the
Merger Consideration.
Upon surrender to the Exchange Agent of an Old Certificate for
cancellation, together with such letter of transmittal, duly executed by the
holder, the holder of such Old Certificate will be entitled to receive the
portion of the Merger Consideration which such holder has the right to receive
pursuant to Section 1.6 above, and the Old Certificate so surrendered will be
canceled. If a transfer of ownership of capital stock has not been registered in
the transfer records of DaMert, then the portion of the Merger Consideration
payable in respect of that capital stock may be issued to a transferee if the
Old Certificate representing that capital stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid.
In the case of any lost, mislaid, stolen or destroyed Old
Certificate, the holder may be required, as a condition precedent to the
delivery to such holder of the portion of the Merger Consideration applicable
thereto, to deliver to Janex an affidavit and personal indemnity (or a bond in a
reasonably sufficient amount) with reference to the circumstances of such loss
or destruction as Janex may reasonably request.
Until surrendered as contemplated by this Section 1.8, each
Old Certificate will be deemed at any time after the Closing Date to represent
only the right to receive upon such surrender the applicable portion of the
Merger Consideration as contemplated by this Section 1.8.
1.8.3 NO FURTHER OWNERSHIP RIGHTS IN STOCK OF MERGING
COMPANIES. The payments and deliveries made under this Agreement upon surrender
for exchange of equity securities of DaMert in accordance with the terms of this
Agreement will be deemed to have been issued in full satisfaction of all rights
pertaining to such equity securities of DaMert after the Closing Date. If, after
the Closing Date, Old Certificates are presented to Janex or its transfer agent
for any reason, such Old Certificates will be canceled and exchanged as provided
in this Agreement.
4
1.8.4 TERMINATION OF EXCHANGE FUND. Any portion of the Merger
Consideration which remains undistributed to holders of Old Certificates at the
end of six months after the Closing Date will be delivered to Janex upon demand
by Janex, and any holders of Old Certificates who have not complied with this
Section 1.8 will then look only to Janex for payment of their claim for the
corresponding portion of the Merger Consideration.
1.8.5 DELIVERY TO A PUBLIC OFFICIAL. None of the parties to
this Agreement will be liable to any holder of equity securities of the Merging
Companies for any portion of the Merger Consideration otherwise due under this
Agreement that is delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
1.9 PROXY STATEMENTS; REGISTRATION STATEMENT. As promptly as
practicable after the execution of this Agreement, the Merging Companies will
prepare and file with the SEC preliminary proxy materials which will constitute
the Proxy Statements of those Merging Companies that have securities registered
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and
the Registration Statement with respect to the common stock of Janex to be
issued in connection with the Merger. Each Merging Company which does not have
securities registered under the Exchange Act will prepare appropriate notices,
disclosure materials and proxies for special stockholder meetings of its
shareholders.
As promptly as practicable after comments, if any, are received from
the SEC on the materials filed with the SEC and the furnishing by the Merging
Companies of all required information, the Merging Companies will file with the
SEC a combined Proxy Statement or Proxy Statements and Registration Statement on
Form S-4 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), and Form 8-A promulgated under the Exchange Act (or on such
other form as will be appropriate), relating to the approval, as and if
required, of the Merger by the stockholders of the Merging Companies, and will
use all reasonable efforts to cause the Registration Statements to become
effective as soon as practicable.
Subject to the applicable fiduciary duties of directors of the Merging
Companies, as determined by such directors after consultation with independent
legal counsel, the Proxy Statements will include the recommendation of the Board
of Directors of each of the Merging Companies in favor of the Merger.
1.10 MEETINGS OF STOCKHOLDERS. Promptly after the S-4 becomes
effective, but subject to Section 1.9 above, each of the Merging Companies will
take all action necessary in accordance with applicable law and its Articles or
Certificate of Incorporation and Bylaws to convene a meeting of their respective
stockholders to consider the Merger. Each of the Merging Companies will consult
with each other and will use all reasonable efforts to hold the stockholders'
meetings on the same day. Subject to the applicable fiduciary duties of
directors, as determined by such directors after consultation with independent
legal counsel, each of the Merging Companies will use its best efforts to
solicit from its stockholders proxies in favor of the Merger and will take all
other action necessary or advisable to secure the vote or consent of
stockholders required by applicable law to approve the Merger.
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1.11 VOTE REQUIRED. Each of the Merging Companies and its Shareholders
represent and warrant that EXHIBIT 1.11 accurately describes the only vote or
votes of the holders of any class or series of stock of that Merging Company
that is necessary to approve the Merger.
1.12 APPROPRIATE ACTION; CONSENTS; FILINGS. Each Merging Company and
its Shareholders will use all reasonable efforts to:
(i) take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things necessary,
proper or advisable under applicable law to consummate and
make effective the transactions contemplated by this
Agreement;
(ii) obtain all consents, licenses, permits, waivers,
approvals, authorizations or orders required under law
(including, without limitation, all foreign and domestic
federal, state and local governmental and regulatory rulings
and approvals and from parties to contracts) required in
connection with the authorization, execution and delivery of
this Agreement and the consummation by them of the
transactions contemplated by this Agreement, including,
without limitation, the Merger; and
(iii) make all necessary filings, and thereafter make
any other required submissions, with respect to this Agreement
and the Merger required under (A) the Securities Act and the
Exchange Act and the rules and regulations thereunder, and any
other applicable federal or state securities laws, (B) the
Xxxx-Xxxxx-Xxxxxx Act (if applicable), and (C) any other
applicable law.
The Merging Companies and the Shareholders will cooperate with each
other in connection with the making of all such filings, including providing
copies of all such documents upon request to the non-filing parties and their
advisors prior to filing and, if requested, to accept all reasonable additions,
deletions or changes suggested in connection with such filings. Each Merging
Company and its Shareholders will furnish all information required for any
application or other filing to be made pursuant to the rules and regulations of
any applicable law (including all information required to be included in the
Proxy Statements and the Registration Statement) in connection with the
transactions contemplated by this Agreement. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, then the proper officers and directors of each party to this
Agreement will use all reasonable efforts to take all such necessary action.
1.13 SHAREHOLDERS' AGREEMENT TO VOTE. Each of the Shareholders hereby
agrees to vote said Shareholder's shares of stock in the Merging Companies in
favor of the Merger as set out in this Agreement.
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ARTICLE II
ADDITIONAL AGREEMENTS
2.1 NOTIFICATION OF CERTAIN MATTERS. Each Merging Company and its
Shareholders will give prompt notice to the other parties to this Agreement, of:
(i) the occurrence, or non-occurrence, of any event
the occurrence, or non-occurrence, of which would be likely to
cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect;
and
(ii) the failure of the Merging Company to comply
with or satisfy any material covenant, condition or agreement
to be complied with or satisfied by it under this Agreement.
2.2 PUBLIC ANNOUNCEMENTS. Each Merging Company will consult with the
other Merging Companies before issuing any press release or otherwise making any
public statements with respect to the Merger, except as may be required by law.
2.3 ACCESS TO CUSTOMER FILES AND OTHER RECORDS. For a period of seven
years following the Closing, where there is a legitimate purpose not injurious
to New DaMert Sub, or if there is an audit by any taxing authority, other
governmental inquiry, or litigation or prospective litigation to which any
Shareholder is or may become a party, the affected Shareholders will be granted
access, at reasonable times and after reasonable notice, to all customer files
and other records transferred to New DaMert Sub pursuant to this Agreement.
2.4 DUE DILIGENCE INVESTIGATION. Each Merging Company will have the
period of time up to and through the date of this Agreement (the "DUE DILIGENCE
PERIOD") in which to conduct any due diligence investigations of the other
Merging Company(s), including UCC-1 searches, which it may deem necessary or
appropriate to ascertain the financial viability and value of the other Merging
Company(s). Throughout the Due Diligence Period, each Merging Company, and its
agents, will have the right to inspect:
(i) all books, records and computer systems maintained by the
other Merging Company(s), in order to authenticate and audit
all financial information provided to it;
(ii) all equipment and machinery used in the operations of the
other Merging Company(s) to verify that it is in an acceptable
state of repair;
(iii) all material agreements to which the other Merging
Company(s) are parties; and
7
(iv) all facilities and physical operations of the other
Merging Company(s), including facilities warehousing
inventory.
Each Merging Company will be given access to the other Merging
Company's federal and state income tax returns, sales tax returns, financial
statements (internal and those issued to third parties), personal property tax
returns, and all other governmental filings, for the three previous years for
the purpose of conducting due diligence investigations.
Each Merging Company and its respective representatives will further
have the authority to communicate with the creditors, debtors, suppliers, agents
and employees of the other Merging Company(s). Each Merging Company agrees to
aid the other Merging Company(s) in the investigations and evaluations of the
operations and financial condition of the Merging Company and its assets, and to
provide whatever information and documents any Merging Company reasonably deems
necessary or appropriate to the making of an informed decision regarding the
Merger, provided such information or documents are available or can be obtained
without unreasonable efforts or expense.
2.5 CONFIDENTIALITY. Between the date of this Agreement and the
Closing, the parties to this Agreement will maintain in confidence, and will
cause their directors, officers, employees, agents, and advisors to maintain in
confidence, and not use to the detriment of the other parties to this Agreement,
any written, oral, or other information obtained in confidence from the other
parties in connection with this Agreement or the transactions contemplated
hereby, unless: (i) such information is already known to such other party or to
others not bound by a duty of confidentiality, or such information becomes
publicly available through no fault of such party, (ii) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the transactions
contemplated by this Agreement, or (iii) the furnishing or use of such
information is required by or necessary or appropriate in connection with legal
proceedings.
If the Merger is not consummated, then each party hereto will return or
destroy as much of such written information as the other parties hereto may
reasonable request.
2.6 INTERIM EVENTS. Each Merging Company agrees that it will take no
action prior to the Closing, other than in the ordinary course of its business,
which would or might have a material adverse effect upon its financial
condition, and no benefits will be paid or incurred to shareholders, officers,
or directors between the date hereof and the Closing other than as is consistent
with past activities and practices or is disclosed on the Merging Company's
Disclosure Schedule (see EXHIBIT 3). Each Merging Company will use its best
efforts to preserve for Janex the present relationships of the Merging Company
with its employees, customers and others having business relations with it. Each
Merging Company will not allow its trade payables to go unpaid, except in the
ordinary course of its business.
8
Prior to the Closing, and except as otherwise consented to or approved
by all of the Merging Companies in writing, which consent will not be
unreasonably withheld, no Merging Company will:
(i) change its Articles or Certificate of
Incorporation or Bylaws;
(ii) change the number of shares of stock issued and
outstanding (other than to cause its equity securities,
including options and equity participation interests, to
conform to the capitalization described in the Merging
Company's Disclosure Schedule (see Section 3.2 below);
(iii) merge or consolidate with or into any other
corporation or other entity;
(iv) declare or pay any dividend or repurchase or
otherwise acquire any shares of stock; or
(v) except in the ordinary course of business and
consistent with past practice, increase the compensation
payable to or to become payable to any shareholder, director,
officer, employee or agent, or to pay any bonus, severance
payment or other compensation to any shareholder, director,
officer, employee or agent, or enter into any agreement of any
type which is not terminable by the Merging Company on no more
than 30 days notice.
2.7 401(k) PLAN. Janex shall take all actions necessary immediately
after the Closing of the Merger either: (i) to roll over DaMert's 401(k) Plan or
similar employee benefit plans, if any, into its 401(k) Plan; or (ii) to
continue DaMert's 401(k) Plan as a separate and distinct plan with no amendments
or alterations adverse to the interests of the employees covered by such Plan.
2.8 EMPLOYMENT AGREEMENTS. At the Closing, and subject to the
consummation of the Merger, Janex shall execute and deliver Employment
Agreements with the persons and on the terms described on EXHIBIT 2.8.1, if any.
The Employment Agreements will be in the form of EXHIBIT 2.8.2, EXHIBIT 2.8.3
and EXHIBIT 2.8.4 except as modified as called for on EXHIBIT 2.8.1
2.9 INDEMNIFICATION. Janex shall indemnify and hold harmless DaMert,
and its directors, officers and employees from and against any liability,
obligation, loss, cost and expense, including attorneys' fees, reasonably
incurred by any of them in connection with any claim, arbitration, mediation or
litigation made or commenced against any of them by a shareholder of DaMert in
respect of the Merger, except for claims of breach of this Agreement by the
indemnified party.
2.10 INDEMNIFICATION OF DAMERT OBLIGATIONS. The amount and terms of
certain loans and obligations of DaMert, its Shareholders and/or guarantors as
identified on EXHIBIT 2.10 shall be treated as stated thereon.
9
Janex shall, simultaneously with the Closing, obtain releases of the
personal guaranties of Xxxx XxXxxx and Xxxx Xxxxxx DaMert and assume debts owing
by DaMert to Xxxxxxxxx XxXxxx as specified in EXHIBIT 2.10.
2.11 EXPENSES AND COSTS OF MERGER. Janex shall pay and be responsible
for all reasonable costs and expenses (including, without limitation, legal,
accounting, auditing, stock transfer agent, cash and securities disbursing
agent, SEC fees and due diligence) of DaMert regarding the Merger.
2.12 RESTRICTIVE COVENANTS.
2.12.1 The DaMert Shareholders shall not, except as
representatives of and as directed by Janex, without the prior written
consent of Janex, which consent may be withheld for any or no reason,
for a period of two (2) years following the Closing, directly or
indirectly, own, manage, operate, control, be employed by, participate
in, render services to, make loans to, or be connected in any manner
with the ownership, management, operation, or control of any business
located anywhere in the world, in any business competitive with the
business of Janex (which shall be deemed to include all business
operations designing, developing, manufacturing, publishing, marketing
and/or distributing books, greeting cards, games and/or toys, or parts
or components thereof); provided, however, that these restrictions when
applied to Xxxx or Xxxx XxXxxx shall be limited to the games and toys
business being conducted by DaMert as of the date of this Agreement.
In the event of any actual or threatened breach of
the provisions of this Section, Janex shall be entitled to seek an
injunction restraining the actual or threatened breach, and/or any
other available remedies for such breach or threatened breach,
including pursuing a recovery for damages.
2.12.2 The DaMert Shareholders shall not at any time, without
the prior written consent of Janex, which consent may be withheld for
any or no reason, disclose, in any fashion other than as required in
the day to day affairs of Janex, to any person or entity: (i) the names
of customers of Janex or the business, or the names of other persons or
entities having business dealings with Janex or the Business, or (ii)
any of the business methods or confidential information of Janex or the
business, including but not limited to their customer lists,
prospective customers, customers purchasing habits, customer contact
personnel, marketing and servicing techniques, financial matters, sales
and marketing systems and methods, marketing development and business
expansion plans and projections, personnel training and development
programs, customer and supplier relationships, and trade secrets. The
obligation of confidentiality shall not apply to any information which:
(i) is in possession of the individual DaMert Shareholder prior to the
receipt thereof from the other DaMert and/or Janex; (ii) is available
or becomes available
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to the public through no fault of the DaMert Shareholder; or (iii) is
received by the DaMert Shareholder from a third party having the right
to disclose it.
2.12.3 The DaMert Shareholders shall not, at any time within
two (2) years after the Closing, without the prior written consent of
Janex, which consent may be withheld for any reason or no reason,
directly or indirectly induce, encourage or solicit or assist any
person who was or is employed (whether as an employee or as an
independent contractor) by a Merging Company during the two years
preceding the Closing, to leave the employ of Janex.
2.12.4 The parties acknowledge and agree that the restrictions
contained herein, including but not limited to the time period and
geographical area restrictions, are fair and reasonable and necessary
for the successful operation of Janex's business, that violation of any
of them would cause irreparable injury, and that the restrictions
contained herein are not unreasonably restrictive of any party's
ability to earn a living. If the scope of any restriction in this
Section is too broad to permit enforcement of such restriction to its
fullest extent, then such restriction shall be enforced to the maximum
extent permitted by law, and all parties hereto consent and agree that
such scope shall be modified judicially or by arbitration in any
proceeding brought to enforce such restriction. The parties hereto
acknowledge and agree that remedies at law for any breach or violation
of the provisions of this Section would alone be inadequate, and agree
and consent that temporary and permanent injunctive relief may be
granted in connection with such violations, without the necessity of
proof of actual damage, and such remedies shall be in addition to other
remedies and rights the parties may have at law or in equity. The
parties agree that no party shall be required to give notice or post
any bond in connection with applying for or obtaining any such
injunctive relief.
2.12.5 The parties acknowledge and agree that the covenants in
this Section shall be construed as an agreement independent of any
other provision of this Agreement, so that the existence of any claim
or cause of action by a DaMert Shareholder against Janex, whether
predicated on this Section or otherwise, shall not constitute a defense
to the enforcement of this Section.
2.13 OTHER AGREEMENTS. Certain additional agreements are described on
EXHIBIT 2.13.
2.14 OTHER DISCUSSIONS. Up to the time of Closing, DaMert may seek or
otherwise initiate discussions with any other prospective acquirer of the stock,
assets or business of DaMert, assist or participate in any due diligence in
connection with any such transaction, and/or seek or otherwise initiate
discussions with any other company governing the purchase by DaMert of the
capital stock or assets of such other company or concerning a merger, share
exchange, consolidation or similar transaction involving DaMert and such other
company.
2.15 BEST EFFORTS TO REGISTER STOCK. After the Closing, Janex shall use
its best efforts to register the Janex common stock with the SEC on Form 8-A and
list the common stock on a national securities exchange.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
OF EACH MERGING COMPANY AND ITS SHAREHOLDERS
The following representations, warranties and indemnities are being made as
of March 1, 2000 by each Merging Company, and the Merging Company's Shareholders
(only those shareholders included in the defined term "Shareholders"), to the
other Merging Company(s) and its/their shareholders (not including just those
shareholders included in the defined term "Shareholders"); provided, however,
that, notwithstanding whether any representation or warranty is made only to the
knowledge of a Merging Company, all representations and warranties of any
Shareholder, unless otherwise specifically identified below, are made only to
the best knowledge of the Shareholder (the representation and warranty of the
Shareholder is to the knowledge of the Shareholder as to the facts presented in
the representation and warranty, and is not as to just the knowledge of the
Merging Company as to those facts). These representations, warranties and
indemnities are subject to any limitations and qualifications or other
disclosures contained in the corresponding sections of the Disclosure Schedule
of the particular Merging Company and its Shareholders, attached hereto as
EXHIBITS 3. A breach of a representation or warranty of a Shareholder of a
Merging Company will be deemed also to be a breach of that representation or
warranty by the Merging Company.
3.1 DUE INCORPORATION. Each Merging Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. Each Merging Company is duly licensed or qualified to
do business and is in good standing in each state where the property owned
or held under lease is such as to require it to be so licensed or qualified,
except those states where the failure to be so licensed or qualified would not
have a material adverse effect on its financial condition or operations or its
business. To the knowledge of the Merging Company and its Shareholders, the
Merging Company has the corporate power and authority to own and operate its
properties and carry on its business as now conducted.
12
True, correct and complete copies of the corporate formation documents for
the Merging Company, and all minutes, resolutions and consents, have been or
will be delivered to the other Merging Company(s). To the knowledge of the
Merging Company and its Shareholders, the minute book(s) of the Merging Company
correctly record all resolutions of the directors and shareholders of the
Merging Company, and its stock records correctly reflect the ownership of its
stock.
3.2 CAPITALIZATION. Each of the Merging Companies has authorized, issued
and outstanding equity securities only as shown on Section 3.2 of its Disclosure
Schedule. Other than as set forth in Section 3.2 of the Disclosure Schedule for
a specific Merging Company, there are no other rights, subscriptions, options,
warrants, conversion rights or agreements of any kind outstanding to purchase or
otherwise acquire from the Merging Company any shares of its capital stock, or
securities or obligations of any kind convertible into or exchangeable for any
shares of its capital stock. To the knowledge of each Merging Company and its
Shareholders, all issued shares of the Merging Company have been duly
authorized, and the issued and outstanding shares of stock are fully paid,
non-assessable (except with respect to any Merging Company that does business in
Wisconsin, as provided in Wisconsin Statutes ss.180.0622(2), as judicially
interpreted), and were not issued in violation of the terms of any agreement or
other understanding, and were issued in compliance with all applicable federal
and state securities or "blue sky" laws and regulations.
3.3 SUBSIDIARIES. Except as set forth in Section 3.3 of its Disclosure
Schedule, no Merging Company owns or has any agreement, whether written or oral,
regarding rights or contracts to acquire any equity securities or other
securities of any company, or any direct or indirect equity or ownership
interest in any other entity.
3.4 FINANCIAL INFORMATION. Each Merging Company has furnished the other
parties to this Agreement with true, correct and complete copies of the Merging
Company's financial statements and other books and records. To the knowledge of
the Merging Company and its Shareholders, the Merging Company's year-end
financial statements were prepared in accordance with its books and records and
in accordance with generally accepted accounting principles consistently
applied, and present fairly the financial condition of the Merging Company as of
their respective dates and the results of operations and changes in financial
positions for the periods then ended. The financial statements do not contain
any material items of special or non-recurring income or other income not earned
in the ordinary course of business, except as expressly specified therein.
To the knowledge of the Merging Company and its Shareholders, at the
Closing, all of the books and records of the Merging Company will be in its
possession, other than the capital stock books and stock transfer records which
may be in the possession of the Merging Company's transfer agent and registrar.
13
3.5 TAXES. To the knowledge of the Merging Company and its Shareholders,
except as may be disclosed in Section 3.5 of the Merging Company's Disclosure
Schedule, all federal and state income, excise, franchise, payroll, property,
sales, and other tax returns required to be filed by or with respect to the
Merging Company (except returns not yet due) including returns of the
Shareholders in the case of any Merging Company that is or was qualified as an S
corporation (for the period of such qualification) have been filed, are complete
and accurately reflect in all material respects all matters therein required to
be reflected, and all taxes shown on such returns to be due, and any assessments
received by either the Merging Company or its Shareholders with respect thereto,
have been paid in full.
3.6 MATERIAL CHANGES. To the knowledge of the Merging Company and its
Shareholders, except as may be disclosed in Section 3.6 of the Merging Company's
Disclosure Schedule, from the date of the most recent financial statements
provided to the other parties to this Agreement, and through the date hereof,
the business of the Merging Company has been conducted only in the ordinary
course, there have not been any material adverse changes in the financial
condition and operations of said business, and there has been no damage,
destruction or other occurrence (whether or not insured against) to tangible
property which materially adversely affects the financial condition or
operations of said business.
3.7 TITLE TO ASSETS; LIENS. To the knowledge of the Merging Company and its
Shareholders, the Merging Company owns all assets it purports to own, including
all assets reflected in its financial statements. Except as may be set forth in
Section 3.7 of its Disclosure Schedule, all assets of the Merging Company are
free and clear of all restrictions, claims, liens, encumbrances or rights of
others, other than those imposed under its Articles or Certificate of
Incorporation or Bylaws, and other than as set forth in the Merging Company's
financial statements, and other than for debts incurred or amended in the
ordinary course of business, including debts to fund Janex acquisitions, since
the date of the most recent financial statements provided by the Merging
Company. The stock of the Merging Companies owned by the Shareholders is free
and clear of any and all liens, claims or encumbrances, except for pledges of
stock securing only the debts of the Merging Companies.
3.8 LITIGATION. To the knowledge of the Merging Company and its
Shareholders, and except as disclosed in Section 3.8 of the Merging Company's
Disclosure Schedule, there is no litigation, proceeding, or investigation
pending against the Merging Company and no reasonable grounds to believe there
is any basis for the commencement of any litigation, proceeding or investigation
against it.
3.9 COMPLIANCE WITH LAWS. To the knowledge of the Merging Company and its
Shareholders, the Merging Company is in substantial compliance with all laws
applicable to it or its business including, without limitation, laws prohibiting
discrimination or harassment, regulating working conditions or governing
employment relations and employee benefits. The Merging Company and its
Shareholders are not aware of any investigation or allegations of any person
with respect to any alleged violation of any provision of any federal, state or
local law,
14
regulation, ordinance, order or administrative ruling, relating to the Merging
Company or its business, except as may be set forth in Section 3.9 of its
Disclosure Schedule.
3.10 INSURANCE. Each Merging Company carries commercially reasonable
insurance against personal injury and property damage to third persons and in
respect of its products and services, and other insurance, including any and all
xxxxxxx'x compensation insurance required by law. Neither the Merging Company
nor its Shareholders have received any notice that the Merging Company is in
default with respect to any provision contained in any insurance policy, and
they are not aware of any such default. The Merging Company has made copies of
all of its insurance policies available to Janex.
3.11 LICENSES. To the knowledge of the Merging Company and its
Shareholders, the Merging Company has any and all material licenses and permits
necessary and/or appropriate to operate its business in the manner in which the
business is currently operated.
3.12 HAZARDOUS MATERIALS. To the knowledge of the Merging Company and its
Shareholders, the business of the Merging Company has never dealt in any manner
with any hazardous or toxic materials or waste.
3.13 JUDGMENTS AGAINST THE MERGING COMPANY AND/OR ITS BUSINESS. Neither the
Merging Company nor its business is under any governmental investigation, no
such investigation has been threatened, and there are no outstanding judgments
against the Merging Company, its business or its assets.
3.14 COMPLETE SALE. All material assets used by the Merging Company in the
operation of its business are reflected in the financial statements of the
Merging Company that have been provided to the other parties to this Agreement.
3.15 ASSETS IN GOOD CONDITION. Except as may be stated in Section 3.15 of
the Disclosure Schedule for the Merging Company, each material asset of the
Merging Company which is a tangible asset is in good working order and
condition, reasonable wear and tear excepted.
3.16 DISCLOSURE MATERIALS. To the knowledge of the Merging Company and its
Shareholders, all of the information disclosed by the Merging Company to any of
the other parties to this Agreement, as a whole, does not contain any statement
that, as of the date hereof, is false or misleading, and does not omit to state
any material fact (i) necessary to make the statements made, in light of the
circumstances under which they were made, not false or misleading, or (ii)
necessary to provide the other parties to this Agreement with complete and
accurate information as to the assets and financial condition of the business of
the Merging Company.
3.17 DEFAULTS. To the knowledge of the Merging Company and its
Shareholders, except as may be described in Section 3.17 of the Merging
Company's Disclosure Schedule, there are no
15
defaults or events that, with the giving of notice or the passage of time, would
constitute defaults under any material document under which the Merging Company
is obligated.
3.18 MATERIAL CONTRACTS. Except as disclosed in Section 3.18 of its
Disclosure Schedule, the Merging Company is not a party to or bound by any
agreement not made in the ordinary course of its business which is material to
its financial condition or operations.
3.19 OUTSTANDING LIABILITIES. To the knowledge of the Merging Company and
its Shareholders, there are no liabilities of the Merging Company other than as
are shown on its most recent balance sheet provided to the other Merging
Companies, and other than (i) matters disclosed in Section 3.19 of its
Disclosure Schedule, and (ii) liabilities arising after the balance sheet date
in the normal course of business out of purchases and sale of goods. There are
no liabilities relating to the Merging Company's business which are more than
ninety (90) days past due, except as otherwise stated in Section 3.19 of its
Disclosure Schedule.
3.20 INVENTORY. Except as disclosed in Section 3.20 of its Disclosure
Schedule, the inventory held by the Merging Company is useable and in good
condition, with not more than 3% thereof (plus any inventory reserve set up on
the financial statements of the Merging Company) being obsolete, and all of the
inventory is owned by the Merging Company, none of it being held on consignment.
3.21 RECEIVABLES. All accounts receivable of the Merging Company arose in
the regular course of business, and, to the best knowledge of the Merging
Company and its Shareholders, represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of business
and are collectable, subject to the Merging Company's customary bad debt
reserves, and subject to no defenses or counterclaims.
3.22 EMPLOYEES. All employee benefits for the Merging Company's employees
are described in Section 3.22 of its Disclosure Schedule. To the knowledge of
the Merging Company and its Shareholders, and except as may be described in
Section 3.22 of the Merging Company's Disclosure Schedule, the Merging Company
is in compliance with all terms of all of its employee benefit plans.
Prior to the Closing, each Merging Company will provide to the other
Merging Companies a complete and accurate list of the following information for
each employee, including each employee on leave of absence or layoff status:
name, job title, current compensation, vacation and sick pay accrued, and
services credited for purposes of vesting and eligibility to participate in any
of the Merging Company's employee benefit plans.
Except as may be disclosed in Section 3.22 of the Disclosure Schedule for a
Merging Company, and except as described in Section 2.8 above, all employment
agreements, consulting agreements and related types of agreements between the
Merging Company and its Shareholders shall automatically terminate as of the
Closing, without compensation being due for services rendered thereunder after
the Closing.
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3.23 NO CONFLICTS. To the knowledge of the Merging Company and its
Shareholders, the execution, delivery and performance of this Agreement and the
other documents and instruments to be executed and delivered pursuant hereto,
and the consummation of the transactions contemplated herein or therein:
(i) Will not violate or conflict with any applicable material, federal,
state, foreign, local or other law, ordinance, rule, regulation, or governmental
requirement or restriction of any kind, including any rules, regulations, and
orders promulgated thereunder, and any final orders, decrees, consents, or
judgments of any regulatory agency or court;
(ii) Will not require any authorization, consent, approval, exemption or
other action by or notice to any government entity (including, without
limitation, under any "plant closing" or similar law); the Merging Company is
not required to give any notice or to obtain any consent from any person or
entity which is party to a material contract or agreement with the Merging
Company or from any governmental agency in connection with the execution and
delivery of this Agreement or the consummation of the Merger, other than the
approval of the Board of Directors and stockholders of the Merging Company
pursuant to the applicable law, as required by applicable federal and state
securities laws and as set forth in Section 3.23 of its Disclosure Schedule;
(iii) Will not violate or conflict with, or constitute a default (or event
which, with notice or lapse of time, or both, would constitute a default) under,
and will not result in the termination of, or accelerate the performance
required by, or result in the creation of any lien, claim or encumbrance upon
any of the Merging Company's assets under its Articles or Certificate of
Incorporation or Bylaws, or any material contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which the
Merging Company is a party or by which the Merging Company or any of the Merging
Company's assets may be bound or affected, other than those material contracts
and agreements which require the consent of the other party thereto as set forth
in Section 3.23 of its Disclosure Schedule; and
(iv) Will not give any governmental body the right to revoke, withdraw,
suspend, cancel, terminate or modify any governmental authorization held by the
Merging Company or that otherwise relates to its business, except with respect
to immaterial circumstances.
17
3.24 VIOLATIONS OF LAW.
(a) To the knowledge of the Merging Company and its Shareholders, none of
the present or past operations of the Merging Company's business, the products
of the business, or the Merging Company's assets violate or conflict, in any
material respect, with any permits, any law (including environmental laws, other
than as set forth in Section 3.24 of its Disclosure Schedule), governmental
specification, authorization, or requirement, or any decree, judgment, order or
similar restriction. To the knowledge of the Merging Company and its
Shareholders, the Merging Company is not the subject of an inspection or inquiry
regarding violations or alleged violations of any law by any state, federal or
local agency.
(b) To the knowledge of the Merging Company and its Shareholders, there are
no pending administrative or judicial proceedings, threatened proceedings,
orders, notice of violations, inspection reports, and similar occurrences, if
any, relating to the conduct of its business or the Merging Company's assets.
(c) The Merging Company has not been the subject of an Occupational and
Safety Health Administration inspection or found by any agency to be in
violation of any state or federal occupational safety or health law in the
conduct of its business.
3.25 CONDITION AND SUFFICIENCY OF ASSETS. To the knowledge of the Merging
Company and its Shareholders, and except as may be stated in Section 3.25 of the
Merging Company's Disclosure Schedule, all material assets of the Merging
Company are in good operating condition and repair, and are adequate for the
uses to which they are being put, and none of such items is in need of
maintenance or repairs, except for ordinary, routine maintenance and repairs
that are not material in nature. To the knowledge of the Merging Company and its
Shareholders, the assets are sufficient for the continued conduct of the Merging
Company's business after the Closing in substantially the same manner as
conducted prior to the Closing.
3.26 BANK ACCOUNTS. The Merging Company has disclosed, or will disclose
prior to the Closing, to the other Merging Companies the names and locations of
all banks, trust companies, savings and loan associations and other financial
institutions at which the Merging Company maintains a safe deposit box, lock box
or checking, savings, custodial or other account of any nature, the type and
number of each such account and the signatories therefor, a description of any
compensating balance arrangements, and the names of all individuals authorized
to draw thereon, make withdrawals therefrom or otherwise have access thereto.
3.27 ENVIRONMENTAL MATTERS. For purposes of this Section:
(i) "Environmental Law" means all federal, state, local, foreign, and other
applicable jurisdiction laws relating to the environment or the use, disposal,
existence, or release of any Hazardous Materials, including but not limited to
any and all laws concerning, affecting, controlling, or in any way relating to,
whether
18
in whole or in part, noise levels, ground vibrations, air pollutants,
water pollutants, process waste water, or Hazardous Materials;
(ii) "Environmental Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the atmosphere, soil, surface water, groundwater or property;
(iii) "Hazardous Materials" means: (A) any waste, hazardous waste,
pollutant, contaminant, or hazardous or toxic substance regulated by law; (B)
asbestos; (C) formaldehyde; (D) polychlorinated biphenyls; (E) radioactive
materials; (F) waste oil and other petroleum products; and (G) any other
substance which constitutes a nuisance or hazard to the environment or the
public health, safety, or welfare.
3.27.1 Other than as set forth in Section 3.27 of its Disclosure Schedule,
to the knowledge of the Merging Company and its Shareholders, the Merging
Company is, and at all times has been, in full compliance with, and has not been
and is not in violation of or liable under, any Environmental Law. The Merging
Company has no basis to expect, nor has the Merging Company or (to the knowledge
of the Merging Company or its Shareholders) any other person for whose conduct
the Merging Company is or may be held to be responsible received, any actual or
threatened order, notice, or other communication from (i) any governmental body
or private citizen acting in the public interest, or (ii) the current or prior
owner or operator of any of the Merging Company's properties or assets, of any
actual or potential violation or failure to comply with any Environmental Law,
or of any actual or threatened obligation to undertake or bear the cost of any
environmental, health and safety liabilities with respect to any of the Merging
Company's properties or assets (whether real, personal, or mixed) in which the
Merging Company has had an interest, or with respect to any of the Merging
Company' properties at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used or processed by the Merging
Company, or (to the knowledge of the Merging Company or its Shareholders) any
other person for whose conduct the Merging Company is or may be held
responsible, or from which Hazardous materials have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
3.27.2 The Merging Company has delivered to the other Merging Company(s)
complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by the Merging Company or its Shareholders
pertaining to Hazardous Materials or hazardous activities in, on, or under the
Merging Company's properties or concerning compliance by the Merging Company or
any other person for whose conduct it is or may be held responsible, with
Environmental Laws.
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3.28 INTELLECTUAL PROPERTY.
(a) The Merging Company has provided the other Merging Company(s) with a
true correct and complete list of (i) all patents held by the Merging Company
and all re-examinations, re-issues, divisions, continuations, continuations in
part and extensions thereof and all pending patent applications by the Merging
Company, including for each such patent the serial or patent number, country,
filing and expiration date and title, (ii) all registered trademarks of the
Merging Company and pending trademark registrations by the Merging Company,
including for each such trademark, the registration number, country, filing and
expiration date, xxxx and class, (iii) all registered copyrights of the Merging
Company and copyright applications by the Merging Company, including the service
marks, trade names and brand names of the Merging Company, used in its business
(whether or not registered) (all of the foregoing collectively referred to as
the "Intellectual Property"). To the knowledge of the Merging Company and its
Shareholders, all such patents, trademarks and copyrights are properly
registered, any applications therefor have been properly made, and all annuity,
maintenance, renewal and other fees in connection with any of the foregoing are
current.
(b) The Merging Company has provided the other Merging Company(s) with a
list of all material licenses, contracts, commitments (including without
limitation, confidentiality agreements) to which the Merging Company is a party
or otherwise subject relating to the Intellectual Property, including, without
limitation, computer software (except for standard licensing agreements or
provisions from the seller or licensor of such software). During the preceding
three (3) fiscal years and the current fiscal year to date, no claim or
allegation of infringement has been made by or against the Merging Company,
whether relating to any item of Intellectual Property or otherwise, no claim or
allegation of misappropriation or misuse of any item of Intellectual Property
has been made by or against the Merging Company, and no claim or allegation has
been asserted against the Merging Company with respect to the ownership or use
of any of the Intellectual Property by the Merging Company or challenging or
questioning the validity or effectiveness of any such license, contract or
commitment, and there does not exist to the knowledge of any Shareholder or of
the Merging Company any valid basis for any such claim or allegation.
(c) To the knowledge of the Merging Company and its Shareholders, the
Merging Company has good and valid title to, or otherwise possesses rights to
use, the Intellectual Property.
3.29 CUSTOMERS AND SUPPLIERS. The Merging Company has provided the other
Merging Company(s) with a list of its five (5) largest customers in terms of
dollar volume of sales for the three (3) preceding fiscal years and for the
current fiscal year, showing the approximate total dollar amount of sales to
each such customer during each such fiscal year. The Merging Company has
provided the other Merging Company(s) with a list of the five (5) largest
suppliers in terms of dollar volume of purchases for the last fiscal year and
for the current fiscal year showing the approximate total dollar amount of
purchases from each supplier during each such
20
fiscal year. Except as may be disclosed in Section 3.29 of its Disclosure
Schedule, since January 1, 1997, the Merging Company has not received any notice
from and has not otherwise been informed or made aware that any such five (5)
largest customers or five (5) largest suppliers will be terminating or
curtailing its business with the Merging Company in a manner that would have a
material adverse effect on the Merging Company.
3.30 CHANGES TO THE MERGING COMPANY'S DOCUMENTS. Except as may be described
in Section 3.30 of its Disclosure Schedule, or disclosed in Exhibit 1.6, none of
the following has occurred within the last twelve months prior to the date of
this Agreement with respect to the Merging Company: (i) any change in the
Articles or Certificate of Incorporation or Bylaws; (ii) any change in the
number of shares of stock issued and outstanding, other than upon exercise of
stock options; (iii) the merger or consolidation of the Merging Company with or
into any other corporation or other entity: (iv) declaration or payment by the
Merging Company of any dividend or any repurchase by the Merging Company of any
shares of its stock; or (v) except in the ordinary course of business and
consistent with the Merging Company's past practice, any increase in the
compensation payable by the Merging Company to any shareholder, director,
officer, employee or agent, or payment of any bonus, severance payment or other
compensation to any shareholder, director, officer, employee or agent, or the
entering into of any agreement of any type which is not terminable by the
Merging Company on no more than 30 days notice.
3.31 STOCKHOLDERS AGREEMENTS AND OTHER AGREEMENTS. To the knowledge of the
Merging Company and its Shareholders, there are no stockholder agreements or
similar arrangements restricting voting rights or the transferability of any
interest in the Merging Company relating to the capital stock of the Merging
Company, or otherwise relating to the Merging Company. This representation and
warranty does not include any pledge by a Shareholder or other stockholder of
capital stock of the Merging Company, the terms of which may restrict
transferability of such capital stock. Furthermore, there are no employment
agreements, consulting agreements or similar type agreements relating to the
Merging Company which are not terminable by the Merging Company on not more than
90 days notice.
3.32 CERTAIN PAYMENTS. To the knowledge of the Merging Company and its
Shareholders, neither the Merging Company nor any shareholder, director,
officer, agent or employee of the Merging Company, or any other person
associated with or acting for or on behalf of the Merging Company, has directly
or indirectly: (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, or (iii) to obtain special concessions or for special concessions
already obtained, for or in respect of the Merging Company, or (iv) in violation
of any law; or (b) established or maintained any fund or asset that has not been
recorded in the books and records of the Merging Company.
21
3.33 FILINGS COMPLETE. Each Merging Company will cooperate with the other
Merging Company(s) with respect to all filings that any of the Merging Companies
make in connection with the Merger and all matters connected therewith.
3.34 PRODUCTS. To the knowledge of the Merging Company and its
Shareholders, except as disclosed Schedule 3.34 for the Merging Company, the
products offered currently or in the past by the Merging Company for sale meet
all material product and/or process specifications which they purport or are
required to meet, and satisfy in all material respects all applicable laws where
the products are currently being sold or have been sold within the last five
years, except where the Merging Company has chosen not to sell products because
the products would violate a law of that place.
3.35 PATENTS. All patents and patent applications or licenses of the
Merging Company are described in Section 3.35 of the Disclosure Schedule.
3.36 INDEMNIFICATION; SURVIVAL. Each Merging Company and its Shareholders,
jointly and severally, hereby agree to indemnify the others and their officers,
directors and controlling persons and defend and hold them free and harmless
from and against any liability, obligation, loss, cost and expense, including
attorney's fees, incurred by them in connection with any material breach by the
Merging Company of any of its representations, warranties or covenants,
contained in this Agreement. For this purpose, any breach or combination of
breaches will be considered material only if they exceed in the aggregate the
amount set forth in Exhibit 3.36 as to any Merging Company.
The representations and warranties in this Section, and elsewhere in this
Agreement, and all indemnification provisions in this Agreement, will survive
the Closing for a period of 18 months thereafter, after which they will expire
except as to any claims asserted on or before that date. The rights of each of
the other parties to this Agreement based upon the representations and
warranties of the Merging Company will not be affected by any investigation
conducted with respect thereto, or any knowledge acquired, or capable of being
acquired, at any time, whether before or after the execution of this Agreement,
with respect to the accuracy or inaccuracy of or compliance with, any such
representation or warranty.
Disclosures made anywhere in this Agreement or its Exhibits shall be deemed
to be disclosures for all purposes of this Agreement.
Nothing contained in this Section 3.36 or Exhibit 3.36 shall in any way
affect or diminish the indemnification rights provided in Section 1.3, Section
2.10 and Exhibit 2.10 of this Agreement.
22
ARTICLE IV
CONDITIONS OF MERGER
4.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger will be subject to the
satisfaction at or prior to the Effective Time of the following conditions,
provided that the failure of Conditions 4.1.4 through 4.1.10 hereof with respect
to any particular Merging Company and its Shareholders will not act as a
condition to the obligations of that Merging Company, or its Shareholders.
4.1.1 STOCKHOLDER APPROVAL. This Agreement and the Merger to which the
Merging Company is a party will have been approved and adopted by the requisite
vote of the stockholders of each Merging Company.
4.1.2 No ORDER. No federal or state governmental or regulatory authority or
other agency or commission, or federal or state court of competent jurisdiction,
will have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which in effect restricts, prevents or
prohibits the consummation of the transactions contemplated by this Agreement.
4.1.3 No CHALLENGE. There will not be pending any action, proceeding or
investigation before any court or administrative agency or by any government
agency or any other person: (i) challenging or seeking material damages in
connection with the Merger or the conversion of any Merging Company's equity
securities into Janex's stock, promissory notes and cash pursuant to the Merger,
or (ii) seeking to restrain, prohibit or limit the exercise of full rights of
ownership or operation by Janex or its subsidiaries of all or any portion of the
business or assets of any Merging Company, which in either case is reasonably
likely to have a material adverse effect on any party to this Agreement.
4.1.4 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of each Merging Company and its Shareholders contained in this
Agreement will be true and correct in all material respects on and as of the
Effective Time, with the same force and effect as though made on and as of the
Effective Time. Each Merging Company and its Shareholders will have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it or them on or prior to the
Effective Time. Each Merging Company and its Shareholders will have delivered to
Janex and to the other parties to this Agreement at the Closing a certificate,
dated the Effective Time, to the foregoing effect.
4.1.5 CONSENTS OBTAINED. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made by any Merging Company or its Shareholders for the authorization, execution
and delivery of this
23
Agreement and the consummation by them of the transactions contemplated hereby
will have been obtained and made.
4.1.6 NO MATERIAL ADVERSE CHANGE. The operations, assets and financial
condition of each Merging Company have not suffered a material adverse change
between the date of this Agreement and the date of Closing.
4.1.7 OPINIONS OF COUNSEL. Each Merging Company will have received an
opinion of outside counsel for each of the other Merging Companies, dated the
Closing, substantially to the effect set forth in Exhibit 4.1.7. Each Merging
Company agrees to provide such an opinion letter.
4.1.8 ASSIGNMENTS. The assignment of all material permits, licenses and
contracts, required to be assigned and necessary to continue the operations of
its business will have been made by each Merging Company.
4.1.9 MAINTENANCE OF ASSETS. Each Merging Company will have maintained its
assets in the same condition as of the date of this Agreement (subject only to
ordinary wear and tear).
4.1.10 ORDINARY COURSE OF BUSINESS. Each Merging Company will have
conducted its business diligently and substantially in the same manner as prior
to the execution of this Agreement and will not have entered into any material
contract, commitment or transaction not in the usual and ordinary course or
business.
4.2 SPECIAL CONDITIONS. The obligations of each Merging Company will be
subject to the satisfaction at or prior to the Effective Time of the conditions
set out with respect to that Merging Company on Exhibit 4.2.
ARTICLE V
TERMINATION, AMENDMENT AND WAIVER
5.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing as described in Section 1.2 above. This Agreement may be terminated at
any time prior to the Closing, whether before or after approval of the matters
presented in connection with the Merger by the stockholders of any Merging
Company, by mutual written consent of each Merging Company and its Shareholders.
If the Closing has not occurred within thirty (30) days after the date of this
Agreement, time being of the essence, by reason of failure of either party to
meet the conditions specified in Article IV above, then this Agreement may be
terminated by any Merging Company, at any time prior to the Effective Time,
whether before or after approval of the matters presented in connection with the
Merger by the stockholders of any Merging Company.
24
5.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 5.1, this Agreement will forthwith become void and
all rights and obligations of any party hereto will cease.
5.3 AMENDMENT. This Agreement may be amended by the Merging Companies and
the Shareholders by action taken by or on behalf of their respective Boards of
Directors, and by such shareholders, at any time prior to the Effective Time;
provided, however, that, after approval of the Merger by the stockholders of any
Merging Company, no amendment may be made which would reduce the amount or
change the type of consideration into which each share of that Merging Company
will be converted pursuant to this Agreement upon consummation of the Merger.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
5.4 WAIVER. At any time prior to the Effective Time, any party hereto may:
(i) extend the time for the performance of any of the obligations or other
duties of the other parties hereto, and (ii) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver will be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
ARTICLE VI
GENERAL PROVISIONS
6.1 TAX TREATMENT. The transactions contemplated hereby are intended to
qualify as tax-free reorganizations under the provisions of Section 368 of the
Code. Each Merging Company and its Shareholders acknowledges, however, that they
have each been represented by their own tax advisors in connection with this
transaction, that no Merging Company has made any representation or warranty to
any other with respect to the treatment of such transaction or the effect
thereof under applicable tax laws, regulations or interpretations. Each party
agrees to use commercially reasonable efforts to obtain tax-free treatment of
the Merger to the extent such treatment is available under applicable tax laws.
6.2 FURTHER ASSURANCES. From time to time, at any other party's request and
without further consideration, each party will execute and deliver to the other
such documents and take such action as the other party may reasonably request in
order to consummate more effectively the transactions contemplated hereby.
6.3 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, then all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as
25
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto will negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
6.4 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties and supersedes all prior agreements and undertakings, both written
and oral, between the parties, or any of them with respect to the subject matter
hereof, and, except as otherwise expressly provided herein, it is not intended
to confer upon any other person any rights or remedies hereunder.
Notwithstanding the foregoing, the terms of certain letters of intent survive
the execution of this Agreement to and only to the extent described on Exhibit
6.4.
6.5 ASSIGNMENT. This Agreement may not be assigned by operation of law or
otherwise.
6.6 PARTIES IN INTEREST. This Agreement will be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or will confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
6.7 SUCCESSORS. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
6.8 GOVERNING LAW. This Agreement will be governed by, construed and
enforced in accordance with the laws of the State of Arizona, without giving
effect to the conflicts of laws rules thereof. The courts of the State of
Arizona will have the sole and exclusive jurisdiction and venue in any case or
controversy arising under this Agreement or by reason of this Agreement. The
parties agree that any litigation or arbitration arising from the interpretation
or enforcement of this Agreement will be only in either Maricopa County Superior
Court or in the United States Federal District Court for the District of
Arizona, and shall be only in the United States Federal District Court for the
District of Arizona if such venue is available. Solely for this purpose each
party to this Agreement (and each person who will become a party) hereby
expressly and irrevocably consents to the jurisdiction and venue of such courts.
6.9 MODIFICATION. Any modification or waiver of any term of this Agreement,
including a modification or waiver of this term, must be in writing and signed
by the parties to be bound by the modification or waiver.
6.10 ATTORNEY'S FEES. Should any party to this Agreement or the
stockholders of any Merging Company institute any action or proceeding to
enforce this Agreement or any provision hereof, or for damages by reason of any
alleged breach of this Agreement, or of any provision hereof, or for a
declaration of rights hereunder, then the prevailing party(s) of such action or
26
proceeding will be entitled to receive from the other involved party or parties
all costs and expenses, including reasonable attorneys' fees and expert witness
fees incurred by the prevailing party(s) in connection with such action or
proceeding.
6.11 COUNTERPARTS. This Agreement may be executed by the parties in one or
more counterparts, and any number of counterparts signed in the aggregate by the
parties will constitute a single instrument. The parties authorize and agree to
accept facsimile signatures in counterparts to this Agreement, and that said
facsimile signatures will for all purposes be binding upon the parties as if the
same were original signatures.
6.12 NOTICES. Any notice or communication given under the terms of this
Agreement ("Notice") will be in writing and will be delivered in person or
mailed by certified mail, return receipt requested, in the United States Mail,
postage pre-paid, addressed as specified in Exhibit 6.12 hereto or at such other
address as a person may from time to time designate by Notice hereunder. Notice
will be effective upon delivery in person, or if mailed, at midnight on the
third business day after the date of mailing.
6.13 PARAGRAPH TITLES AND HEADINGS. The titles and headings of sections of
this Agreement are for the convenience of reference only, and are not intended
to define, limit, or describe the scope or intent of any provision of this
Agreement, and will not affect the construction of any provision of this
Agreement.
6.14 BROKERAGE, FINDER'S OR FINANCIAL ADVISOR'S COMMISSIONS. The parties
each represent and warrant that all negotiations relevant to this Agreement have
been carried out by them directly, without the intervention of any person, other
than as specified on Exhibit 6.14. Any other brokerage, finder's or financial
advisor's fee that should arise from this transaction will be paid by the party
who contracted with such person. That party will indemnify and hold harmless the
other party against and in respect to any claim for such fee relative to this
Agreement, or to the transaction contemplated hereby.
6.15 MISCELLANEOUS. The parties agree that each party and its counsel have
reviewed and revised this Agreement, or had an opportunity to review and revise
this Agreement, and that any rule of construction to the effect that ambiguities
are to be resolved against the drafting party will not apply to the
interpretation of this Agreement or any amendments or exhibits hereto. No waiver
of any provision of this Agreement will be effective unless made in writing. The
parties do not intend to confer any benefit upon any person, firm, or
corporation other than the parties hereto. No representation or warranty herein
may be relied upon by any person not a party to this Agreement.
27
IN WITNESS WHEREOF, each of the Merging Companies have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized, and each of the Shareholders have executed
this Agreement on their own behalf.
JANEX: Janex International, Inc., a Colorado corporation
By /s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx, President
DaMERT: DaMert Company, a California corporation
By /s/ Xxxxxxxxx X. XxXxxx
-----------------------------------------------
Xxxxxxxxx X. XxXxxx, Chairman
SHAREHOLDERS:
DaMert: /s/ Xxxxxxxxx X. XxXxxx
--------------------------------------------
Xxxxxxxxx X. XxXxxx, Trustee of the DaMert
Trust, UTD September 28, 1998
/s/ Xxxx Xxxxxx DaMert
--------------------------------------------
Xxxx Xxxxxx DaMert, Trustee of the DaMert
Trust, UTD September 28, 1998
Janex: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Xxxxxxx X. Xxxxx
